Disrupting Philanthropy: Silicon Valley Nonprofit Launches pNFTs

EAST PALO ALTO, CA — Damondrick Jack, the manager of strategy at East Palo Alto-based nonprofit StreetCode Academy, was scrolling through the social audio app Clubhouse for the first time in February when he came across a room with the rapper MC Hammer. The topic was non-fungible tokens (NFTs).

Jack didn’t know what NFTs were, but he did know MC Hammer. For four hours, he stayed in the virtual room, listening to how NFTs — unique digital assets representing real-world objects like art, music or videos that can be bought and sold — could revolutionize monetization for creators.

Jack went back to his colleagues at StreetCode and they discussed: “Where’s the money going? What if it went into the hands of organizations like ours? How can we shave off a little sliver of these billions of dollars and direct it towards organizations that are doing social good?”

In September, StreetCode — which aims to bridge the digital divide in Silicon Valley by providing tech resources and training to underserved communities — auctioned off what it called the world’s first series of pNFTs, or Philanthropic NFTs, defined as any NFT where a portion of the revenue goes to a nonprofit. The series included one-of-a-kind digital prints featuring former NFL running back Justin Forsett, New York Times best-selling author Julie Lythcott-Haims, the hip-hop singer Swoope, and more.

The organization received 60 bids and raised $15,000 between Sept. 15 and Sept. 30, the fastest it has ever raised that much, according to Jack. Aside from the winner taking home the pNFT, each participant received a downloadable StreetCode Zoom background and those who donated $250 or more got a unique pNFT Zoom background.

StreetCode's leaders feel a responsibility to lead the way in tech innovations to serve the community as a tech-based Silicon Valley nonprofit, according to Olatunde Sobomehin, StreetCode's founder. StreetCode was recently named the 2021 Nonprofit of the Year in the Peninsula by state Sen. Josh Becker (D-Menlo Park).

“While huge amounts of cash are changing hands through crypto and NFTs, we believe pNFTs let nonprofits participate, where we’re only limited by our creativity, and not by the resources we have on hand to win grants, host donors, and otherwise play the traditional game,” Sobomehin said.

StreetCode’s goal is for those who win their pNFTs to resell them, because the organization receives a 90 percent royalty, enabling them to fundraise and the buyer-turned-seller to write off more of their taxes. The pNFT would then generate revenue indefinitely, without the nonprofit having to expend additional resources.

“We hope that unlocks a lot of capital sitting on the sidelines,” Jack said to Patch. “There’s going to be an intersection of people who need a tax write-off and love NFTs, and be like, ‘Alright, this is a way for me to support my NFT habit and get a tax write-off.'”

Enabling Participation

The nonprofit also hosted a class in April explaining the basics of NFTs, which are a relatively new concept in the tech world. Most people in the community that StreetCode serves will not “jump over the hurdles necessary to buy an NFT,” according to Jack.

But Jack noted the importance of keeping the community updated on the latest in technology, because the digital divide can create an economic divide. So they tried to invite members to participate without having to “watch a million YouTube videos and ask a ton of questions.”

“Especially when you’re in the heart of Silicon Valley, it’s a tech economy and if you can’t participate in that, you are getting left behind while housing prices keep rising,” Jack said. “The fact of the matter is, if you see billions of dollars pouring into a space, you at least want your community to know about it.”

Related: StreetCode Academy Named Peninsula's 2021 Nonprofit Of The Year

The world of NFTs is akin to a “Wild West,” according to Greg Lutze, cofounder and chief experience officer of VSCO, a photography mobile app that is partnering with StreetCode on the project.

“It’s an opportunity for creators to own their value chain, to make what they love, and be rewarded for doing so,” Lutze said. “For StreetCode to be at the forefront of this space for nonprofits is particularly compelling, as this is an opportunity for people to invest in NFTs and an amazing organization.”

Jack believes that pNFTs have the potential to be a gamechanger for nonprofits to raise money, but only if the concept is simplified and a strong use case emerges. For instance, if StreetCode wanted a new building, it could create a pNFT of a building and people could donate towards it by purchasing the pNFT.

StreetCode leaders hope that other nonprofits will pick up on the idea and do pNFT fundraisers of their own, based on the model that StreetCode created.

“The best way to do it is to lead by example,” Jack said. “We’re going to build the model, and we hope that other people come along and build on it, or replicate it, or make it even better. This is just the beginning. I know that people can improve upon what we’ve done.”

Visit streetcode.org/pnft for more information.